Toyota Manufactoring Case

Executive Summary

The production of the new Camry model has introduced new challenges in the Toyota's Georgetown Plan such as higher labour costs, lost production due to below than projected utilization rates, growing number of inventory in the line, less output per hour, and problems to meet sales agreements at distributions channels. Even though the problem has been attributed to the seat, the management does not know where the source is. Given that at looking to meet the short-term demand production targets the management has deviated from its TPS philosophy, Toyota has lost the trace of the problem and now has the challenge to address it in order to revert this trend. After a throughout analysis, we found out the following aspects could have had a different degree of impact in today's outcome. The seat types were increased from 12 to 84 with a very short period of accommodation time for the supplier. A higher number of Andon Pulls were found in the second shift. Part of the seat quality problems have also been found in months preceding the new launch. As a resulted we concluded that Management should eliminate the recent deviations from the TPS system and enforce its application thought extensive coaching in order to identify the source of the problem. Several actions should be taken at three levels (Assembling, overflow, and KFS). Due to the reports provided by different areas of the plant, it is likely that the seat problem has many sources that have been aggregated in the end. The following report outlines the problem statement, a short analysis, a list of the proposed solution and recommendations for the management team.

Problem Statement

There have been several signs of problems throughout the assembling line primarily associated with the seat. The line utilization, which measures the number of cars actually assembled divided by the number of cars that could have been assembled, dropped from 95% to 85%. This has led to a significant increase in overtime costs to offset the shortfall of 45 cars per shift. Also, there has been an increase in the number of cars seated off line in the overflow parking area with defective seats or no seats, directly impacting the sales of the company due to the delays in delivering. The offline cars in the overflow area have remained for three days without being repaired, creating an inventory accumulation. This evidently constitutes a step outside of the TPS (Toyota Production System) based on the JIT philosophy in the plant. Furthermore, the assembling team has moved away from the principle of jidoka (make any production problem instantly self-evident and stop producing whenever problems were detected). In this case, the line has not been stopped when a defective seat or a mismatch is found. Unlike jidoka and going back to the old production philosophy, the management decided to install defective seats in the cars and deal with the problem later in the production line, arguing that it was: a) too expensive given the time to replace the seat, b) the car could be finished without seat assemblies, and c) the assembling team knew of the problem. The number of andon pulls in the seat area increased in late-April. The reasons for that were the occasional seat damage caused by assembling tools, cross threading, and workers not aware of the seat problem. And lastly, the seat type increased from 12 variations before production of the new vehicle to 84 variations at the end of April. This situation was exacerbated by the limited time that KFS had to prepare for the new model. One of the main problems of bypassing jidoka principles when a seat problem is detected is that the connection between where the problem occurs and solving it is lost. It makes it harder to identify the root cause of the problem.

To summarize, it was a managerial problem in first place. They did postpone the solution of the problem being short-sighted of the implication of stopping the line in the short term.

Analysis: It is unknown the extent to which the patrol quality control inspectors located at the receiving dock are actually verifying all possible deviations from the requested order. For instance, among the most frequency defect occurrences in the line are material flaw, missing part, and wrong part, among others. Perhaps inspectors are only limiting themselves to inspect material flaw only. Missing parts and wrong parts could be associated to specific car models and not necessarily seat models. Seat-bolster-broke which ranks as the third most frequent defect could be redesign to accommodate the particularities in the American facility. Despite the deviations from the TPS system that management promoted, the majority of the defects can be attributable to KFS as seen in the Exhibit 8 - Group Leader's Seat Defect Data for the month of April. Another particular situation that can be seen in the Exhibit 10 - Andon Pulls at Left-Hand Side Seat Installation, is that number of Andon Pulls at the front seat installation stations have remained relatively low and steady. Contrary. The growth in Andon Pulls have been found at rear seats station and particularly in the second shift. From the same chart it can be concluded that the problem is not related to a particular seat side. Since the seat quality review report is filled in the overflow area, it is difficult to narrow the source of the problem. For instance, since workers are installing seats regardless of defects, problems such as wrinkles on the rear seat could be caused by working at the installation station of when the seats are loaded in the conveyor or at any other place. Therefore, actions should be taken at different levels of the assembling line. We have seen that problems such as wrinkles and missing parts have been in top list for the last 7 months. This could be a great opportunity to address a problem that could have remained hidden due to a relatively low variability in the seat types.

Alternatives: The Toyota Production System has been proven to be successful at reducing costs, improving quality, and ultimately at increasing the competitiveness level in the marketplace. It is imperative that Doug Friesen maintains consistency in way the whole system is managed. Hence, the alternatives that deal with the problem statement have to be in line with guiding principles (produce only what is needed when it is needed and jidoka).

Actions in the Overflow area: The overflow area is indeed the last correction step before the vehicle is shipped to the distribution channels. Specific actions aimed to address the seat problem in this area could be to separate the seat problems from other types of problems, and guarantee that the correct replacement seat is installed.

Actions in the Assembly Line: Even though the hook design has not been a relevant issue in the Tsutsumi

...